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09/23/2007

Universal National Service is a Tax, and a Bad One ‚ÄìBecker

Universal service usually means that young persons, say 18 year olds, can either be drafted into military service for a specified period, say a year or two, or instead they can work for a similar period in one among a number of qualifying occupations. In Germany qualifying occupations include menial jobs in hospitals or nursing homes, while France has qualified working overseas in a French company. This approach to service has been advocated mainly by persons who would like all young persons to serve in the military, but reluctantly recognize that this is impracticable because of the small size of the peacetime armed forces compared to the much larger number of young persons available.
In effect, such compulsory service is a tax on those serving that has many of the characteristics of a very bad tax. It is a tax in kind, on the time of young persons, rather than a tax on income, wealth, or spending. A tax in kind limits the ability of those taxed to respond by substituting toward a more efficient allocation of their resources. In-kind taxes also limit how governments can spend their tax receipts since these tax receipts are not general purchasing power. Universal service is also a narrow-based rather than a broad-based tax. Broad based taxes, such as a general value added tax on all transactions, are better because marginal tax rates, and hence the inefficiency caused by the tax, can be lower for a given level of receipts since the base being taxed is more extensive. By contrast, narrow taxes have high marginal rates for any given revenue, and hence generally distort behavior much more. In the case of service, young individuals who have much better opportunities in school or at jobs that do not qualify will be taxed heavily, as would young persons who greatly dislike spending all their time either in military service or at one of the recognized alternatives.
Narrow-based taxes often are enacted because of the weak political power of those being taxed compared to groups who benefit either directly or indirectly from such taxes. For there is no argument based on efficiency why young persons should be the primary suppliers of the resources needed to fund peacetime armed forces. The effects on efficiency would be better during a major war since then the social cost of the taxes needed to get enough young volunteers for the armed forces may exceed the social cost of a draft.
The logic of combining a military draft for young persons with an alternative of compulsory service at other occupations is questionable also on grounds other than being a bad tax. If greater employment at hospitals or other tasks has social value beyond the private value to those working there, it would be better to subsidize anyone who works at these tasks than to require young persons to work there. With subsidies, the general taxpayer would finance any desired greater output in these sectors rather than young persons doing their compulsory service. Furthermore, a subsidy would attract workers of all ages, and so would be much less socially costly than compulsory service applied only to a single age group.
As Posner indicates, one possible justification for compulsory universal service is the belief that it is good for young men (and women as well?) to serve with low pay in the military or other specified occupations. The argument might be that such service makes them better citizens, perhaps because they would then appreciate the hardships of the poor. (Does that mean that the poor should be exempt from this service?) Even accepting this argument, which I do not, compulsory service is a bad policy. A better way to achieve service with low pay would be to combine a ceiling on the earnings of young persons- the opposite of a minimum wage- with a subsidy to employers if they hired these persons at the desired occupations. This approach would have the advantage over compulsory service of allowing young men (and women) to avoid the military and other specified options if they had much-preferred alternatives even for the same pay. Although I have shown that compulsory service is partly equivalent to a ceiling on the earnings of young people, would politicians or anyone else who advocate compulsory service call explicitly for such a ceiling? I very much doubt it!

The money allocated for such potential programs would be better spent to increase pay or benefits for those in the military.

The influx of young people into the public service sector could force down wages for full time employees in these jobs. You could have fewer dedicated employees and more marginally motivated temp workers.

Government make work jobs rarely teach people anything but how to game the system as they observe the obvious foibles of the government agency that run these programs.

At a time when America's infrastructure is said to be crumbling and there is increasing concern about protecting the environment, I am surprised that there has been no mention of Roosevelt's New Deal Civilian Conservation Corps. This program is said to have served many useful purposes, in addition to employing the unemployed youth of America. The program was only 6 months in duration but taught young people the habits of physical exercise and positive nutrition. At the same time, it provided many infrastructure and conservation programs. The economic analysis might be quite different if it had considered the societal benefits in terms of the positive impact on youth and the fact that members of the corps would be doing jobs that don't seem to be getting done in our society today. I, for one, would not have minded spending 6 months after college working outside in service to my country. And, I'd be happy to see my children do the same when they complete college, before they head off for graduate or professional school.

Andy Rooney addressed this issue in one of the most politically incorrect, yet thought provoking, commentaries I have ever seen. (Only a WWII veteran could get away with saying something like this without getting shot...) I pasted it below; there is also a video of it at the link I posted.

(http://www.cbsnews.com/stories/2007/03/08/60minutes/rooney/main2547775.shtml)
There have been stories recently about the problem the Pentagon is having recruiting enough soldiers to do the fighting that we're committed to do in Iraq.

In an attempt to get the soldiers they need, recruiters have reduced the standards for getting into the Army or Navy.

They have reduced the educational standards, for example, so that they're getting more soldiers who didn't go to high school, let alone graduate from high school.

Recruiters are granting thousands of what they call "moral waivers". A "moral waiver" it turns out means they'll take someone who has committed a crime or even someone who has been in prison. Last year, a total of 8,129 "moral waivers" were given to men who volunteered for the Army.

Are these the people we want representing us? As American soldiers, they're going to give the people they meet around the world the impression that they are what all Americans are like and if they have been taken from the bottom of the barrel, they are not what we're all like.

In August of 1941, I had just finished my junior year in college when I was drafted into the Army. Hundreds of my classmates were drafted at the same time.

I hated everything about Army life. I hated the Field Artillery regiment I was assigned to. Most of the guys in it were high school dropouts and the Army wasn't using the term "moral waiver," yet but a lot of them would have needed it.

They had joined before the draft so they had already been promoted to being corporals or sergeants and they were in charge of the rest of us.

In 1942 we were at war with Germany and it wasn't long before drafted college students and high school graduates dominated our military. It changed the United States Army for the better and in two years made it the best fighting force there has ever been. The Army and Navy were no longer made up of losers.

Now comes the part of this I never thought I'd hear myself say: Whenever we, as a nation, decide to fight a war ‚Äì in Iraq or anywhere else ‚Äì it should be fought by average Americans who are drafted.

UCD neuro: re: I am surprised that there has been no mention of Roosevelt's New Deal Civilian Conservation Corps.

........... It gets confusing to compare! Consider that FDR was trying to sop up excess unemployment via government spending, most likely with the product produced being of secondary concern. Today? The Feds spend 20% of the GDP and then there is state and local spending. One guesses, and hopes, that today's method of identifying a need and either getting it done by professional government employees or letting a contract or grant creates more efficiency than that of hiring legions of unskilled amateurs unable to operate modern equipment etc. Still, I'd not mind seeing some doing a brief stint in an updated CCC.

But! considering that the "new economy" requires 70% college grads or hi-tech employees and we graduate 25% from college, perhaps, as I tell my college kid, the best use of their time is to "learn stuff". As in your field "kids" average 25 or older when they begin their careers, and seemingly, America's greatest challenge is that of becoming competitive enough to make it in the global economy.

Lastly, given that we're at full employment, even with the uncontrolled immigration, we hardly need "make work" projects. Instead, what would seem to address many of our problems would be a strong increase in efficiency and greater per capital productivity. No relief from the millwheel? Jack

The reason for national service in Germany is the country's history. One cause of the decline of the Weimar Republic was the unwillingness of the army to participate in a democratic system. Especially the generals and high officers were part of the late German Empire and not very apt to accept the new political system, especially since they built a legend upon the alleged "stab in the back" by politicians in parliament towards the end of WW I. Thus, the military tried to justify the outcome of the war. After WW II, one thought it would be a good thing to create an "army of the people" by drafting young men coming from all segments of the civil society in order to establish an enduring connection between the army and the civil society to ensure the inflow of democratic thought.

I remember talking with two former CCC recruits. They talked about how happy their mother's were to get them off the inner city streets of Chicago. The mothers were afraid that large groups of unemployed young people could only get into trouble, especially during the hot summer months.

As for the CCC experience, they claimed that their big take away was that the both contracted an STD from local prostitutes and learned where the local stills were located.

I have no idea how common this experience was but I do question the value of CCC type programs.

My mother was a closet Marxist who shipped me to a farm one summer. What did I learn? I didn't want to be a farmer and Marxism is crazy.

Patrick: Just for consistency be sure you're not voting for any open or closet warmongers. The numbers of "volunteers"/economic refugees are growing thin at the price offered, and the mercenaries are not only expensive but their "Generals" are corrupting our nation.